Anti-Spyware Suits: New Era for Security Industry?

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News Analysis: Civil complaints against Direct Revenue and 180Solutions are seeking class action status. A preliminary ruling could open the floodgates and change the face of the adware/spyware industry.

The legal battle against adware and spyware programs has taken a new turn with a pair of putative class action complaints against Direct Revenue and 180Solutions, two companies facing allegations of installing online tracking software through security holes and making it virtually impossible for computer users to remove the unwanted programs.

Now that a judge has issued a preliminary order to allow one of the cases to proceed to trial, anti-spyware advocates say they believe the tide has shifted dramatically in favor of exasperated computer users.

In the Direct Revenue LLC suit, in which the actions alleged range from installing ad-serving software without user consent to privacy invasion and computer tampering, District Court judge Robert Gettleman ruled that the case can proceed on four of the five counts.

The order was a major blow to Direct Revenue's request to have the case thrown out. It also may open the floodgates to similar suits against other adware vendors.

Two weeks later, the Collins Law Firm, which filed the Direct Revenue suit, copied and pasted the point-by-point complaint in a new case against 180Solutions Inc., again seeking class action status for the complaint.

A spokesperson for the Collins Law Firm declined to speculate on new targets for such suits, saying it was difficult to track down the more notorious spyware companies, but he refused to rule out the possibility of new class action complaints.

"We received a nice ruling to allow that [Direct Revenue] case to go forward and we're pursuing those," the spokesperson said in an interview. "We're asking the court to allow millions of consumers to come together to join the complaint ... We want the court to hear the case on behalf of millions of consumers."

Some critics argue that class action suits only benefit lawyers and aren't necessarily the best way fight against spyware, but, according to two prominent anti-spyware advocates, any move that forces adware vendors to clean up their installation and ad-serving practices eventually benefits consumers and businesses struggling to cope with the spyware scourge.

"I think it's too soon to say whether we'll see a flood of these kinds of suits. Clearly some folks would love to portray this litigation as a bad thing. But the fact is, there aren't that many companies that fall into the magic window herebased in the United States, with big powerful funding and easy-to-find headquarters, while also installing their software without consent (or paying others to do so)," said Ben Edelman, a researcher studying spyware and a Ph.D. candidate at Harvard University.

"It's probably still too soon to say what will happen for future class actions in this genre. Will the plaintiffs prevail? The initial Direct Revenue ruling means [the] plaintiffs will at least have a chance to put on more of their case. But that doesn't mean they'll win for sure," Edelman said.

Still, Edelman said he sees value in holding adware vendors accountable, and said it was no surprise that 180Solutions and Direct Revenue were the first to be sued.

"Non-consensual installations of 180Solutions through security exploits were reported as long ago as August 2004, 13-14 months ago," he said, pointing out that video evidence of non-consensual software installations almost always include 180Solutions and Direct Revenue.

Both companies have gone to great lengths to drop rogue affiliate distributors and soften their public images. But Edelman said he believes the evidence in support of the lawsuits is overwhelming.

"As these vendors report tens of millions of dollars of annual revenues, it's natural to want to hold them accountable for their actions. After all, they're earning this money from showing ads to users who were never asked to agree, and who never did agree," he said.

Eric L. Howes, an anti-spyware activist who serves as a consultant to Sunbelt Software, said he believes the class action complaints have the potential to snowball.

"What this law firm is effectively doing is showing how attorneys can pursue these cases. It's still very early on in these two cases but I'm sure there are other attorneys paying close attention to how they proceed. There are other plaintiff attorneys who are scouting around for other targets as well."

To Howes and Edelman, the allegations in the complaints are rather unremarkable. "They're basically stating things that have been known to researchers in the anti-spyware community for some time now. Nothing in there made me stand up and say, hmm, I haven't seen that before," Howes said.

He said the entire industry is keen to see how the law will regard and treat behavior that spyware critics have been deploring for a long time.

"I'm very interested to see how the law will regard some of these behaviors, which I think are outrageous."

Like Edelman, Howes said he is not surprised to see that 180Solutions and Direct Revenue among the first targets.

"These two were certainly good targets, but I can tell you there are others out there that are ripe for action. I expect to see a lot more of these lawsuits," Howes said.

The case was later settled, but the message was sent, and there was a dramatic shift in the attitude of adware companies towards critics.

"The initial case against Intermix substantially changed tone of discussion. Earlier this year, they [the adware vendors] were sending off legal threats and cease-and-desist letters to anyone who criticized them publicly. They were insolent and arrogant.

"Since the Intermix case, we've seen adware companies scrambling to make changes to their software installation methods. All the efforts to clean up are a direct response to Spitzer's action," Howes said.

He believes Spitzer's office and the attorneys at the FTC (Federal Trade Commission) have been quietly working on cases against other spyware purveyors. "We could very well see new cases. In fact, we know they are aggressively investigating behind the scenes."

Eric Goldman, assistant professor at Marquette University Law School, said he sees an intriguing precedent being set by the putative class action claims.

In a Weblog entry tracking the topic, Goldman said the preliminary order in the Direct Revenue case was "a big win for the plaintiffs."

"Moreover, the judge signaled in a few places that he was sympathetic to the plaintiff's concerns. While there's plenty of litigation standing between the plaintiffs and a payday, this ruling dramatically increases the odds of the plaintiff's success," Goldman added.

From a precedent standpoint, he said, he believes this is the first case to say that individual users may have a valid cause of action for common law trespass to chattels claim based on software using their personal computers.

"I trust we all can appreciate the floodgates of litigation that may open if undisclosed downloading of software (not just adware) onto a user's computer can support a trespass to chattels claim ... We'll have to see if the court puts any better parameters on its thinking at the summary judgment stage," Goldman said.

Check out eWEEK.com's for the latest security news, reviews and analysis. And for insights on security coverage around the Web, take a look at eWEEK.com Security Center Editor Larry Seltzer's Weblog.

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